Capitolized is a twice-weekly digest that keeps an eye on the representatives you voted for (or against) with expert reporting, analysis and insight from the editors and reporters of Montana Free Press. Want to see Capitolized in your inbox every Tuesday and Friday? Sign up here.
February 24, 2023
A proposal is gaining momentum to allocate $2 billion from the state’s General Fund to the coal severance tax trust fund. This proposal has received support from Democratic legislative leaders and has attracted a diverse group of lawmakers from both parties, including those from different factions within the GOP, who have signed on as co-sponsors. A hearing on this proposal is scheduled for next week.
“The coal trust fund is in the Constitution. It’s been a good idea for 50 years. And so why aren’t we looking back to a program and a resource and an asset that we know is a good idea to pay it forward for the next 50 years,” said the sponsor of Senate Bill 346, Sen. Ryan Lynch, D-Butte, who’s been telling people to “trust the trust.”
Money in the coal trust is invested, generating interest that flows to uses including water and sewer projects, job creation grants and public school facilities. More than $1 billion sits in the trust currently.
Lynch stated that the various buckets encompass infrastructure grants, planning grants, water, and wastewater. These allocations have a wide-reaching impact on all aspects and regions of Montana. Furthermore, Lynch confidently asserts that the coal trust fund is undoubtedly a beneficial initiative.
The bill’s more than 40 cosponsors include House Minority Leader Kim Abbott, D-Helena, and numerous other Democrats in both chambers along with more than a dozen Republicans, from comparative moderates like Sen. Jeff Welborn, R-Dillon, to comparative hardliners like Rep. Braxton Mitchell, R-Columbia Falls. Rep. Amy Regier, R-Kalispell, the sister of House Speaker Matt Regier, is also signed on.
As budget talks heat up, the proposal has caught the attention of Republican legislative leadership and officials in the governor’s office, but not necessarily because they’re on board. As the state is preparing its two-year operating budget, it’s sitting on an estimated $2.5 billion budget surplus in the bank. The dozens of spending, tax rebate and tax cut bills advancing at the Legislature total roughly $2 billion over the biennium. Lynch’s $2 billion bill, should it pass, would conflict with the ambitions expressed in those bills.
“I can speak for leadership. We don’t support the bill,” said Senate Majority Leader Steve Fitzpatrick, R-Great Falls. “It’s $2 billion, which means we won’t be able to do things like fund the tax rebates. It would prevent us from doing things that are good policy, like front-loading the gas tax accounts. My view is there’s nothing wrong with saving money … but when you have pressing immediate needs, you know, those need to be taken care of. And we do have pressing immediate needs.”
Matt Regier, the House Speaker, took a more cautious approach when discussing the bill, considering it as just one possibility for utilizing the state’s surplus. However, he expressed skepticism about the bill’s chances of being approved with a complete allocation of $2 billion.
Several lawmakers sponsoring the bill have already voted for priorities that would likely conflict with the coal trust allocation, like what’s come to be known as the six- (or sometimes eight-) pack: a series of GOP-backed tax rebates, tax cuts and other spending measures. And Democrats have their own $1 billion plan to tap the surplus for investments in affordable housing, childcare, health care reimbursement rates, progressive tax relief, rebates for renters and more.
The bill could also eat up funds that the governor has set aside in his recommended budget, like a $190 million income tax cut. Gianforte avoided saying anything definitive on the bill when asked in a press conference this week.
Some skeptics of the coal trust bill suspect that its purpose is not primarily investing money in the trust but rather to provide lawmakers with negotiating tools when their budget priorities are not being met.
“It’s being used more for leverage than reality. It’s offering an option,” said Rep. Llew Jones, R-Conrad, the House Appropriations Committee Chair. “This would be saying, look, we don’t have to spend money, we can just put it in the trust.”
The GOP’s right-wing members would seek to utilize the bill as a bargaining tool to secure increased direct tax rebates and reduce ongoing expenditure.
Fitzpatrick stated that, in his understanding, the reason behind their actions is their desire for increased funds for rebates.
“Basically we put that bill up because we feel that there is revenue surplus money that is being directed in ways that maybe are not conducive to a conservative thought process,” said Sen. Dan Bartel, R-Lewistown, a cosponsor. “So we just put the bill up and we put a $2 billion price tag on it and allow the legislators to have an option.”
He stated that only time will determine whether it becomes a source of leverage.
Democrats, meanwhile, have seen legislative leadership put the kibosh on several of their plans, like a long-term property tax relief bill from Rep. Jonathan Karlen, D-Missoula. They’ve attacked the GOP’s rebate plans as rushed, irresponsible and regressive. Investments that Republicans have proposed to address the state’s needs, Democrats have criticized as insufficient.
Abbott said that the coal trust plan, in contrast, demonstrates a cautious and prudent approach towards managing the public’s funds.
Lynch maintains that his bill is merely a beneficial proposal. As the appropriations process unfolds, he asserts that there is enough space in the budget to accommodate both his coal-trust booster and the investment priorities of the Democrats.
Welborn admitted that he backs the eight-pack, but stated that all the people he has spoken to agree that it is wise to utilize surplus funds for savings.
According to Welborn, is there any project in Montana that can match the long-term benefits and cost savings of an idea like this, which ensures safety and transparency, and is successful regardless of who is in charge?
The bill languished after introduction for a week without a scheduled hearing. That just changed — it’s now headed for a hearing in the Senate Local Government Committee on Feb. 27. To stay alive, it’ll have to pass out of committee and win approval in the Senate before the transmittal deadline on March 3 — a tall order.
Lynch made a mental note of the committee referral.
In a text, he stated, “The local government has no involvement in this matter. They are attempting to deceive me.”
Abbott speculates about the reason behind the prolonged delay in the bill’s progress. He believes that the leadership is actually opposed to the bill’s passage, but due to the significant number of Republican lawmakers supporting it, they have deliberately postponed a hearing in order to create an impossible deadline.
She stated, “I believe the number of Republican cosponsors could be a determining factor. If there are enough, I anticipate it will successfully pass through the Senate.”
—Arren Kimbel-Sannit
Bill Report
House Bill 359, which would ban drag performance in public spaces including schools and libraries when minors are present, sailed through the House Friday in a 64-32 vote. During the floor debate Thursday, Republicans described the bill, sponsored by Rep. Braxton Mitchell, R-Columbia Falls, as a measure to protect children from adult performances, with several equating drag to stripping and other sexual displays. Democrats tried to puncture that narrative, with Rep. Zooey Zephyr, D-Missoula, describing drag performance as a celebratory and empowering part of LGBTQ culture. If Republicans had attended an all-ages performance in Helena last weekend, Zephyr said, “what you would have seen is people in full-length dresses, in beautiful gowns, celebrating our art, our history, and the fact that we’re alive today.” The bill will now proceed to the Senate for consideration.
House Bill 337, which would have encouraged housing construction by forcing cities to allow building on smaller lots, failed on a 6-10 vote by the House Local Government Committee Thursday evening. Sponsored by Rep. Katie Zolnikov, R-Billings, the measure had been seen by market-focused housing advocates as testing the waters for how sympathetic that committee will be to zoning reforms that override local government control in an effort to ease Montana’s housing crunch.
Senate Bill 245, another zoning reform push, passed the Senate Local Government Committee 8-1 earlier this month and passed the Senate on a 40-10 vote Friday. Sponsored by Sen. Daniel Zolnikov, R-Billings, SB 245 would require cities to permit apartment complexes and mixed-use buildings in areas currently zoned for commercial use.
The Way Things Work
Montana’s work-in-progress budget for the 2024-2025 biennium passed a wonky milestone this week as work by the Legislature’s appropriations committees progressed far enough for fiscal analysts to publish the session’s first General Fund status sheet.
The status sheet, which will be revised and republished periodically through the remainder of the session, is one of the main tools lawmakers use to ensure that the hundreds of bills under active consideration in the Capitol will produce the balanced budget required by the state Constitution.
The document includes an agency-by-agency breakdown of General Fund spending in the state’s main budget bill, House Bill 2, detailing how the current budget bill compares to the proposal put forward last fall by Gov. Greg Gianforte. It also lists other live bills with budget impact — more than 100 at the current count — and sums their cumulative effect on the state’s finances.
Here are the key stats:
- $4.2 billion — Agency spending that would be authorized over the next two years by the Legislature’s working draft of House Bill 2. That’s 0.1% below the governor’s proposal.
- $1.9 billion — Total amount of new spending and tax cuts proposed by other live bills.
- $2.2 billion — The projected balance at the end of the fiscal year 2025.
- $558 million — The amount by which revenues exceed proposed spending in fiscal year 2025.
Please be aware of the following limitations: The figures provided pertain exclusively to the state General Fund and do not encompass funding from special-purpose sources or federal funds managed by state agencies.
Also, in an effort to avoid cluttering the list with bills that are unlikely to pass, the Legislative Fiscal Division employs strict rules for deciding what to include on its budget impact list. Generally, pending bills that have advanced out of their first legislative committee and haven’t been voted down or tabled make the list, though analysts exclude some bills awaiting appropriations committee review after passing an initial floor vote.
That means this week’s list includes some of the big-ticket legislation working its way through the Legislature, such as GOP-supported tax rebates and the governor’s signature income tax cut. But it also means the initial list excludes at least one major spending measure in the mix: House Bill 226, which would put $300 million toward shoring up state pension plans (that bill passed a House Appropriations Committee vote Thursday, after the initial status sheet was published).
Furthermore, lawmakers have the opportunity to incorporate fresh spending measures into the mix. Budget bills can be introduced until March 28th and have until April 3rd to pass through their initial chamber in the Legislature.
Read the full status sheet here.
—Eric Dietrich
Vote Viz
Democrats and 19 Republicans joined together Friday to narrowly kill House Bill 464, legislation sponsored by Rep. Paul Fielder, R-Thompson Falls, that would have allowed judicial candidates to declare partisan affiliations. It’s one of several bills in either chamber this session to either mandate or allow judicial candidates to do so.
The Game is Afoot
House Bill 332, sponsored by Rep. David Bedey, R-Hamilton, was tabled Friday by the House Appropriations Committee on a 13-10 vote. The bill proposed investing $60 million in one-time funds to establish a statewide health insurance trust for public school employees.
Bedey and other supporters, including the Montana School Boards Association, argued that such a trust would help drive down costs for struggling districts and increase take-home pay for teachers.
Nevertheless, there were two Republican legislators who voiced their apprehension regarding the requested funding and the mandated five-year commitment to the trust before withdrawal would be permitted. Bedey, in a conversation with Capitolized on Friday, expressed surprise at the unexpected final vote count, especially considering the widespread bipartisan support for HB 332 on the House floor earlier in the week.
Bedey expressed his astonishment at the Democrats who voted against it, particularly because they did not voice any objections to the bill, leaving him utterly perplexed.
As budget talks intensify, the minority party, comprising of Democrats, has resorted to tough negotiations by aligning with Republican hardliners against the proposal. This move highlights the internal divisions within the Republican caucus, despite their overwhelming majority. In the past, Democrats have typically supported moderate GOP lawmakers on major policy objectives. However, they now assert that they are not obligated to back the majority if they perceive a lack of reciprocity in their own agenda.
Other bills, including Senate Bill 47, a proposal to bring the state’s commercial drivers license regulations in line with federal requirements; House Bill 321, a conservation district and school funding bill; and House Bill 402, another Bedey measure concerning voter citizenship requirements, have faced similar fates at the hands of unconventional bipartisan coalitions, whether on the floor or in committee.
“I think the folks in appropriations are taking up some space right now on proposals because we have priorities,” House Minority Leader Kim Abbott, D-Helena, told reporters at a press conference Friday. “If people are expecting our votes to move priorities, even if we like them, we need our priorities funded too. We have good ideas in this building, and we want to see them get fair hearings. We want to see them move.”
Abbott identified higher healthcare provider rates and a substantial commitment to housing as key priorities for the Democratic caucus to advocate for.
Although HB 332 has been postponed, there remain procedural options to revive it and other stalled measures if a sufficient number of lawmakers agree. Abbott indicated this possibility during the press conference.
She remarked that tabling bills is frequently a temporary matter.
Bedey refrained from speculating on the specific motivations of Democrats on the appropriations committee. However, he suspects that the unusual votes witnessed both in committee and on the floor this week may be a result of internal political strategies aimed at gaining an advantage.
“This is not a mere outcome of thoughtful policy analysis,” he remarked. “Rather, these votes are driven by political maneuvering. There are numerous factors contributing to this reality, as politics and the current session in Helena tend to witness such occurrences, especially prior to transmittal.”
—Arren Kimbel-Sannit, Alex Sakariassen, and Eric Dietrich
Heard in the Halls
“We don’t need United Nations Agenda 21 density planning from the Montana Senate. We need to let the people of Montana enjoy the value of their home based on the zoning from when they bought it, not for when we thought we had a crisis that we could solve on their backs.”
—Sen. Brad Molnar, R-Laurel, during debate this week on Senate Bill 245. The proposal, which passed on second reading Thursday, would require cities with populations over 7,000 to permit apartment complexes and mixed-use buildings in areas currently zoned for commercial use.
Background Reading
The flow of the coal severance tax trust fund
How to spend a $2.5 billion surplus? Lawmakers have no shortage of ideas: This story goes deep into the fight over Montana’s budget surplus. (MTFP)
